How to manage your corporate culture to benefit the bottom line
Culture is a key indicator of a healthy organization
Corporate culture, the health, wellness and foundations of productivity for your company, permeates every department in your company and is the lens through which others see your company. What is your corporate culture? We talk about it often enough, but why is it so important? A company’s culture is, truly, the key indicator of corporate health, and, by extension, an indicator of success or failure. Ignoring problems in corporate culture will ultimately impact your bottom line and can result in make it or break it decisions down the line. How you manage your corporate culture in every day operations and periods of transition and change will ultimately define your company’s success.
Culture and leadership are intertwined
For better and worse, culture and leadership are inextricably linked. Founders and influential leaders often set new cultures in motion and imprint values and assumptions that persist for decades. Over time, an organization’s leaders can also shape culture, through both conscious and unconscious actions, and sometimes with unintended consequences. The best leaders are fully aware of the multiple cultures within which they are embedded, can sense when change is required, and can deftly influence the process. The inexperienced leaders who ignore the importance of culture can find themselves ousted by the very company they founded.
Culture starts at the top
A culture can still be strong and bad at the same time. How do you shape it to be strong and good?
A strong leader ensures development and implementation of company culture, but actively manages culture at every level – from the board room – to the lunch room – to the conference room – to work areas - to reception. A good measure of a company’s character is their ability to apply their culture to strategic planning, day-to-day operations and when managing transitions, crisis and challenges. Strategic use of culture to help solve both external and internal issues keeps a company on track. A strong, culture-oriented board is also critical to success and the bottom line. While the board has a fiduciary duty to take charge and hold management accountable, it also serves as a vehicle to foster good culture through feedback and insights from senior management.
Complacency kills culture
The worst thing company leaders can do is realize there are issues or dysfunction within teams, executive staff, or departments, all of which negatively impacts the company’s culture, and do nothing. Typical causes of complacency include a leadership team that becomes too comfortable or risk-averse, or creates barriers to innovation, creativity and progress. This can lead to a negative corporate culture and can result in revenue shortfall, declining sales, and competitive disadvantage in the market place. The fix for complacency is at the board and senior management levels and requires taking charge of the corporate culture and holding individuals accountable for implementation. Without a re-centering on corporate culture, the company risks losing top talent and innovators and being left with disrupters or “driftwood staff” that negatively impact the bottom line.
Culture is not solely an HR priority
This can take shape in many ways depending on what the company wants to achieve and the investment in time they are willing to make.
Unfortunately, it is far more common for leaders seeking to build high-performing organizations to be confounded by culture. Leaders may lay out detailed, thoughtful plans for corporate strategy and execution, but because they are not aware of the need for or have not spent the time to understand their company’s culture or its power, dynamics and impact on the bottom line, they do not incorporate culture management into the strategic planning process and plans go off the rails. Indeed, many leaders either let culture go unmanaged or relegate it to human resources, where it gets lost in policies, guidelines and perks rather than steering leadership and the bottom line.
How to manage culture to benefit your bottom line
There are five steps to managing your company’s culture to benefit your bottom line: identify, assess, measure, align, and protect, and, while they are sequential, they are also cyclical, as the process needs to be repeated as an ongoing priority.
- Identify and define your company’s culture
- Assess your culture
Define your culture by identifying five to ten qualities and behaviors that serve as the foundation for competitive advantage in a market place, retain talent, and differentiate the company. Once you have a thorough sense of your company culture, consider how your company communicates and implements, supports and protects the culture throughout the corporate structure. How does the culture support your company’s vision and mission?
Is your culture good, bad, positive, or negative? What makes it good or bad? Does it lead to growth or stifle your company? An honest assessment of your culture is critical to improving it. Questions to help you assess your culture include:
- Do you have diversity in compensation for men and women?
- Are you providing fair compensation to shareholders?
- How are you retaining talent?
- Why do talented employees stay?
- Are stakeholders leaving? If so, why?
- Does your culture support your mission and vision?
- How is your management team behaving?
- How well do you use annual reviews to measure progress as the organization?
- Is management making decisions that are aligned with your culture?
- Is the company holding on to individuals that are disrupters?
- Is the company losing staff or sacrificing one for many?
- Which leaders exhibit leadership styles and values that could best support the culture?
Create measurable benchmarks for the qualities and behaviors that define your culture and track them over time, and at least annually. Use the assessment questions to help create meaningful and measurable benchmarks and norms that address both positive and negative aspects of your culture for an accurate snapshot in time.
There is a powerful triumvirate in corporate transformations – strategy, capabilities and culture and all three need to be designed together, aligned and integrated to create true organizational transformation. Review management systems, strategic planning, talent, and performance in the context of culture to develop an integrated model for leadership that aligns strategy, capabilities and culture.
To protect your company culture, it is imperative to make it a top priority and create a company-wide system that provides seven elements of protection:
- Integrity and loyalty - encouragement to do the right thing at every level
- Security and assurance - safe methods to report behavior that doesn’t align with the culture
- Feedback - periodic and regular feedback such as annual company culture surveys
- Opportunities for improvement - avenues for course correction or refinement based on feedback
- Risk Analysis - methods for identifying, monitoring and analyzing potential internal risks and threats to the company culture such as groups that are not in alignment or are not protecting the culture
- Review - regular and periodic review and reassessment at the leadership level
- Support - regular opportunities for leadership to demonstrate support for culture
When to apply the 5-step culture management process
The five-step culture management process is a critical undertaking for leadership of every organization at all stages of a company’s maturation, including inception, launch, investment/funding rounds, and throughout a company’s growth. In addition, application of the culture management process is critical to the success of major transitions, including changes in leadership, IPO, major growth or expansion efforts, downsizing, and mergers and acquisitions.
For mergers and acquisitions, for example, numerous studies have shown that cultural dynamics represents one of the greatest yet most frequently overlooked determinants of integration success and post-merger performance. Merger and acquisitions may fail due to not adequately addressing culture of each company and developing a cultural merger plan as part of the merger strategy. The organizations M and A board is typically involved and should speak to the relevance of cultural dynamics. It is imperative that the companies involved implement the five-step culture management process in a collaborative manner to reveal shared values and areas of compatibility that create a foundation for a new culture. Designing and managing a new culture based on complementary strengths can speed up integration and create more value over time. Implementation should include identification of important differences, strategies to address them effectively, and identification of leaders at both organizations to serve as bridges to and champions for the new culture. Once leadership defines the new culture, it is critical to develop a program to launch and promote cultural alignment, with an emphasis on clarifying priorities, making authentic connections, and developing team norms that bring the new culture to life. Finally, structural elements of the new organization need to be designed with culture in mind, including a model for leadership that encompasses recruitment, talent assessment, training and development, performance management, reward systems, and promotions. Such design considerations are often overlooked during organizational change.
Company culture is much more than just the sum of perks and policies or what makes a company a great place to work. It permeates every aspect and department of the company, from its mission and vision to marketing, sales, operations, administration, and more. Understanding your company’s culture as well as its power and impact, making it a high priority at the leadership level in the company, and managing it through a regular, dedicated 5-step process of identification, assessment, measurement, alignment, and protection throughout a company’s growth is a key factor in company success that benefits the bottom line.
To learn more about creating a Leadership Culture, our leadership models and consulting services, contact us at:Laura@epiphanyconsultingsolutions.com
©  Laura Perez Ehrheart | April 26, 2018Back to Home >>